Lewis v. Quality Coal Corporation

• Decision Date: 24 September 1959
• Docket Number: No. 12562.,12562.
• Citation: 270 F.2d 140
• Parties: John L. LEWIS, Henry G. Schmidt and Josephine Roche, as Trustees of the United Mine Workers of America Welfare and Retirement Fund, Plaintiffs-Appellees, v. QUALITY COAL CORPORATION, an Indiana Corporation, Defendant-Appellant.
• Court: U.S. Court of Appeals — Seventh Circuit

270 F.2d 140 (1959)

John L. LEWIS, Henry G. Schmidt and Josephine Roche, as Trustees of the United Mine Workers of America Welfare and Retirement Fund, Plaintiffs-Appellees, v. QUALITY COAL CORPORATION, an Indiana Corporation, Defendant-Appellant.

No. 12562.

United States Court of Appeals Seventh Circuit.

August 18, 1959.

Rehearing Denied September 24, 1959.

N. George Nasser, John R. Jett, Terre Haute, Ind., for appellant.

Louis D. Nattkemper, Terre Haute, Ind., Harold H. Bacon, Washington, D. C., Dewey & Nattkemper, Terre Haute, Ind., Val J. Mitch, Washington, D. C., M. E. Boiarsky, Charleston, W. Va., for appellees.

Before DUFFY, Chief Judge, and SCHNACKENBERG and CASTLE, Circuit Judges.

CASTLE, Circuit Judge.

Plaintiffs John L. Lewis, Henry G. Schmidt and Josephine Roche, as Trustees of the United Mine Workers of America¹ Welfare and Retirement Fund, by their second amended complaint, in the district court sought recovery of a money judgment against Quality Coal Corporation, an Indiana corporation (herein called Quality), defendant, based upon agreements known as The National Bituminous Coal Wage Agreement of 1950 as Amended Effective September 1, 1955 as Amended Effective October 1, 1956, herein referred to as the 1950 agreement, or the agreement.

Quality answered, denying inter alia that it owed any money, and averring that said agreement was invalid.

Plaintiffs and Quality each filed a motion for summary judgment. In opposition to plaintiffs' motion and in support of its own motion, Quality attached 10 affidavits.

The district court found that "there is no genuine issue of fact to be submitted to the trial court as to plaintiffs' motion for summary judgment" and thereupon entered judgment accordingly. The district court found, however, that "a question of fact is raised by defendant's motion for summary judgment," and that "defendant is not entitled to judgment as a matter of law"; it thereupon denied Quality's summary judgment motion. By its judgment the district court ordered and decreed that plaintiffs recover of Quality the sum of $84,176.40, with interest and costs. Quality has appealed, seeking our review of the actions of the district court.

Plaintiffs' second amended complaint makes the following material averments:

Plaintiffs are trustees of the United Mine Workers of America Welfare and Retirement Fund of 1950 created by contract dated March 5, 1950.

Quality signed the National Bituminous Coal Wage Agreement effective September 1, 1955, and a similar Agreement effective October 1, 1956, in which it agreed to pay forty cents (40¢) per ton for all coal produced during these periods of time;² during the dates herein mentioned, Quality produced 210,440.99 tons of coal and by virtue of said contracts, it was indebted to the plaintiffs in the sum of $84,176.40.

The record reveals no dispute as to the correctness of the foregoing recital.

Quality denies the validity of the agreement as being contrary to law, and hence says it is not indebted to plaintiffs. Quality contends, on several grounds, that, as a matter of law, the judgment below should be reversed.

1. It contends that plaintiffs cannot sue as trustees, for the reason that no trust has ever arisen or been established as to the money sued for, because no money had ever been transferred or delivered to the alleged Fund. However, the agreement provides:

"Title to all moneys paid into and or due and owing said Fund shall be vested in and remain exclusively in the Trustees of the Fund, * * *."

Under this language a trust was created, the corpus of which was any money transferred or delivered by Quality to the trustees for the purposes of the agreement or which Quality became obligated to transfer to the trustees for that purpose. We hold that a trust was created.

2. The agreement sued on provides:

"* * * It is further agreed that as a condition of employment all employees shall be, or become, members of the United Mine Workers of America, to the extent and in the manner permitted by law * * *." (Italics supplied.)

Quality contends that this language provides for a closed shop, thus violating 29 U.S.C.A. § 158(a) (3), which reads:

"(a) It shall be an unfair labor practice for an employer —

* * * * * *

"(3) by discrimination in regard to hire or tenure of employment or any term or condition of employment to encourage or discourage membership in any labor organization: Provided, That nothing in this sub-chapter, * * * shall preclude an employer from making an agreement with a labor organization * * * to require as a condition of employment membership therein on or after the thirtieth day following the beginning of such employment or the effective date of such agreement, whichever is the later * * *."

The provisions of § 158(a) (3) do not prohibit as unfair labor practice, or invalidate, collective bargaining agreements requiring union membership as a condition of employment provided becoming such a member may be deferred to or after the thirtieth day following the beginning of employment, or effective date of the agreement, whichever is later.

Of course, without the portion italicized above the provisions of the agreement here under consideration would violate § 158. Lewis v. Jackson & Squire, D.C., 86 F.Supp. 354. It would, without reservation or limitation as to time of joining, require union membership as a condition of employment. But the qualifying phrase "to the extent and in the manner permitted by law" expressly modifies and limits the application of the clause relating to union membership so that any requirement it imposes is conditioned on conformity to existing or future law. The provision of the agreement relating to union membership is thus limited and qualified by its expressed terms so that it imposes no requirement as a condition of employment which would conflict with 29 U.S.C.A. § 158(a) (3) or any other law.

Lewis v. Fentress Coal & Coke Co., D. C., 160 F.Supp. 221, 224 (affirmed 6 Cir., 264 F.2d 134), involved the same contract now before us. It was held that the union membership provision did not violate a Tennessee statute prohibiting contracts making union membership a condition of employment nor violate 29 U.S.C.A. § 158(a) (3). The District Court referred to the language "to the extent and in the manner permitted by law" as a "savings clause". We are dubious as to whether such description was apt. The language employed is not couched in the form usually employed in a so-called "savings clause". It is language which serves to restrict and modify the words of the same sentence in which it is employed and relates to that subject matter alone. Here the meaning and intent of the contractual provision involved is fully expressed in one sentence. No general requirement is imposed, limitations on which must be searched for in some other separate provision or clause of the contract. The qualified condition imposed is expressed as one complete provision. Its application is not to be measured by some standard found elsewhere in the contract. We agree, however, with the view expressed by the District Court in Fentress that the phrase in question is "clear and unequivocal".

We further agree with Fentress that cases such as N. L. R. B. v. Gottfried Baking Co., 2 Cir., 210 F.2d 772; N. L. R. B. v. Gaynor News Co., 2 Cir., 197 F.2d 719 and Red Star Express Line of Auburn v. N. L. R. B., 2 Cir., 196 F.2d 78 are distinguishable. In Gottfried the agreement contained a union security provision which on its face and by its very terms was illegal. The court found that a separate "savings clause" was "too lacking in specificity" to prevent the preferential hiring provision from constituting an unfair labor practice. Gaynor involved a contract containing a union security provision also by its terms illegal. The court found that a general savings clause "which only postponed" the issue of the legality of the closed shop provision for future determination by some proper tribunal did not prevent the provision from being a violation of law. In Red Star Express Lines the union security provision was concededly illegal under the Taft-Hartley Act. The parties to the contract by letter agreed upon an addendum which, because of its vague language, the court found did not have the effect of preventing the security provision from being a violation of the Act.

In the instant case validity of the union membership provision is not dependent upon some vague or indefinite savings clause. Its validity is assured and protected by the very language in which the condition of union membership is stated. This is not the case of a provision illegal by its terms which must be sustained, if at all, by resort to some independent general savings clause. It is a case where the provision is qualified by its own terms so that it meets the test of legality. We conclude that the union membership provision in question does not violate 29 U.S.C.A. § 158(a) (3).

The validity of the agreement is not affected by any conduct or practice of the parties which would constitute an unfair labor practice under 29 U.S.C.A. § 158(a) (3). At most, such conduct or practice, not authorized by the agreement itself, would show that the Union and Quality violated applicable law. It would not alter or change the terms of the agreement. Lewis v. Fentress, D.C., 160 F.Supp. 221 (227).

3. Quality further contends the agreement is void because of duress. It relies, in this respect, on allegations of its Answer that because of concerted activities and threats by the union it executed the agreement in order to avoid strikes and work stoppages, and on the affidavit of its president that he executed the agreement against his free will and that of the corporation. In American Brake Shoe Co. v. N. L. R. B., 7 Cir., 244 F.2d 489, we recognized that the right to engage in a lawful strike is a protected concerted activity. The threat to cause a legal strike and its attendant work...